How to calculate the sale price of a service

How to calculate the sale price of a service

Sometimes we were before the problematic one that many workers freelance are specialistic in their specific areas, although lamentably they are in the situation of not knowing how to suitably establish the sale price of its services. Many people change their way of life, before companies or agencies were used of in which surely they were dedicated to the design, the programming, the SEO€¦ etc, and they suddenly try to change of model and to work independently, being in a new scene in which they must begin to know the commercial area and of the businesses, that is to say, of learning to supply and to sell a certain service.
It is at that right moment when we realize of which we do not have nor idea of how to fix our prices, still more when one is intangible services as it is the case of the graphical design and Web.

If we want that our business is the wished successful, as for example the case of the design Freelance Web, we must define correctly which are the prices of our services, in this way we will be able to be organized, to cover the expenses and power to arrive in order month with a worthy margin of benefits, that it allows to dedicate us to us to which we like of professional way.

Then, we asked ourselves:
How much it would have to receive? How calculation the price of my services? How much it is worth my time?

The prices of your services surely will vary and evolve with time, since they depend on a series of internal and external factors that your you only can control, although the purpose of this post is to help you and to guide so that you are able to work and to establish the value adapted to your work, creating some to you estimated more than acceptable and professional that help you to catch clients and to close agreements.

How to establish your tariffs

First that we must do it is to bring back to consciousness to us of which the fair value by a work is the price that your client is prepared to pay by him, and to detect and to establish this number we will consider the following factors:

to establish tariffs

Price based on the competition

Many companies or freelance orient their strategy of prices totally being based on the competition, which does is to request a ghost budget or a proposal false to meet how they acquire by his services the rest of professional profiles of his sector, I personally I am not in favor to act in this way, since it irritates me very many when they make me waste the time, for that reason I prefer very superficially to value the price of market without arriving to make waste the time to the others. In order to have an approach of the value of my product or service in the market I detect that is my competition and I obtain an approach of his tariffs, although logically attempt that this is only one of the factors to consider, and the only and main factor not to establish my tariff.

price competition
123RF

In broad strokes you can be positioned against your competition of 3 different ways:

  • Pon a price similar to the one of your competition:
    It values and it compares the service that supplies your competition, and if he is really similar to yours, it tries to compete with them. Although they ten in account that the clients not only determine to the value of the service or product, also to the quality, and even the references of other users or portfolio of previous projects in whom you have worked and with that you have forged your experience.
  • Pon a price superior:
    Throughout the years that I take in this sector I have given account that exists many €œprofessionals€ which they do a great commercial work and they sell products and services over the value of the market, this deceives and confuses enormously to target of client, that thinks that contracting most expensive they are obtaining the best thing as far as quality, when they are really mistaken.

    If you show preference for this option, to establish high prices and that are accepted, you will need portfolio resisted clients, and although I personally am not in favor to pour off to me by this model of work, confess that I in his place can work well, since I have known people who work little and receive much, although would not sleep calm, since attempt to fulfill to the 120% with the expectations generated in each one of the projects in which I am contributor.

  • Pon a price inferior:
    This technique usually is realised in the initial stage of a business, although also he is usual that companies that offer services over the value of market, have one second associated line of economic product to another different brand, with the aim of monopolizing most possible of the market/sector.

    My opinion is that this model can work and make you very well make money very quickly, although if scales immediately to a new strategy, is not possible that you stagnate and you finish saturated of clients who look for low COST, with the consequences that can bring.

Price according to your expenses

An aspect very important to consider at the time of calculating the sale price of a service, is the amount of your monthly expenses. Each person or business has her particular situation, and their monthly expenses will to a great extent depend on many factors related so much to their lifestyle as with all the circumstances that surround to their business.

Arrived at this point I advise to have a removal of expenses in excel, to a side the monthly expenses of your personal daily life, and to the other the professional expenses. It seems something quite rustic, although really it turns out effective to be completely realistic from the situation in which we are.

Example of table of personal monthly expenses
personal expenses

Example of table of professional monthly expenses
professional expenses

Price according to the value of your service/product

This it is the perhaps more delicate point, since when being our own service or product we can lie down to overvalue it, and to put price to an end item by one same one is something that is quite complex.

My advice is that you previously think and you value which is the price/hour of your work, and the amount of hours that you are going to dedicate in it, having had in account all the commented points.

In order to know what is the price hour that we must establish, I advise to you to know and to consider the following factors:

  • Personal and professional expenses
  • Whichever nonbillable hours you realise monthly in meetings, accomplishment of budgets€¦ etc.
  • The percentage of benefit outside the price/hour that you wish to obtain for projects in which you use an energy extra.
  • To know and to be conscious what works usually you realise that they need a special attention, some cases are special.
  • To know which is the final pay that you wish to have.

Conclusions

You do not lose of view to the competition but bases your prices and do not do just like the others, you to size do a strategy for the type of work and client that you have, but mainly know you same and you value to where you can arrive with the work that you realise.

You know some alternative method to calculate the price of your service?
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A greeting,
Oscar/Whitechsolutions
By “scar Carrillo